Correlation Between Ep Emerging and Inverse Dow
Can any of the company-specific risk be diversified away by investing in both Ep Emerging and Inverse Dow at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ep Emerging and Inverse Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ep Emerging Markets and Inverse Dow 2x, you can compare the effects of market volatilities on Ep Emerging and Inverse Dow and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ep Emerging with a short position of Inverse Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Inverse Dow.
Diversification Opportunities for Ep Emerging and Inverse Dow
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between EPEIX and Inverse is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Inverse Dow 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Dow 2x and Ep Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ep Emerging Markets are associated (or correlated) with Inverse Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Dow 2x has no effect on the direction of Ep Emerging i.e., Ep Emerging and Inverse Dow go up and down completely randomly.
Pair Corralation between Ep Emerging and Inverse Dow
Assuming the 90 days horizon Ep Emerging Markets is expected to generate 0.44 times more return on investment than Inverse Dow. However, Ep Emerging Markets is 2.27 times less risky than Inverse Dow. It trades about -0.21 of its potential returns per unit of risk. Inverse Dow 2x is currently generating about -0.37 per unit of risk. If you would invest 1,064 in Ep Emerging Markets on September 4, 2024 and sell it today you would lose (38.00) from holding Ep Emerging Markets or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ep Emerging Markets vs. Inverse Dow 2x
Performance |
| Timeline |
| Ep Emerging Markets |
| Inverse Dow 2x |
Ep Emerging and Inverse Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ep Emerging and Inverse Dow
The main advantage of trading using opposite Ep Emerging and Inverse Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ep Emerging position performs unexpectedly, Inverse Dow can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Inverse Dow will offset losses from the drop in Inverse Dow's long position.| Ep Emerging vs. Ep Emerging Markets | Ep Emerging vs. Europac International Bond | Ep Emerging vs. Europac International Dividend | Ep Emerging vs. Europac International Dividend |
| Inverse Dow vs. Basic Materials Fund | Inverse Dow vs. Basic Materials Fund | Inverse Dow vs. Banking Fund Class | Inverse Dow vs. Basic Materials Fund |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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